Fight The Power: The Problems With LIPA and National Grid

Last July, soaring thermometers in the Northeast set a record. This summer is already sizzling, and it may reach historic highs, too. As Long Islanders sweat it out, one thing is certain: When they flick on their lights, crank up their air conditioners, or log on to their computers, they hardly think twice that the power won’t be there. How quickly we forget. The last big blackout to hit here struck the afternoon of Aug. 14, 2003, when a high-voltage power line in northern Ohio overheated and sagged into overgrown trees (some reports, later dismissed, tied the spreading outage to Chinese computer hackers). Ultimately 50 million people in Canada and eight U.S. states were left in the dark.

The Long Island Power Authority (LIPA) was not to blame, although it certainly drew heat from many irate customers. Blasting LIPA for things that aren’t its fault is a Long Island tradition. One reason is that countless Long Islanders today associate this unique public utility—there’s none like it in the United States because it doesn’t even own a single power plant—with its much-maligned predecessor, the Long Island Lighting Company, which it replaced in 1998. Say the word “LILCO” to longtime residents and listen to the memories of abuse suffered at the hands of that despised company. They’ll complain how the awful ice storm in 1978 robbed hundreds of thousands of Long Islanders of the Super Bowl because the utility crews were overwhelmed by the magnitude of the crisis, or that Hurricane Gloria in 1986 needlessly left large swaths of the Island without power for weeks because tree-trimming had been drastically cut back for years.

But LIPA isn’t out of the woods these days. Far from it, as a glance at recent headlines reveals. This utility, which basically consists of 90 state employees trying to oversee a $4 billion operation, has gotten slammed with bad news. And that comes on top of its charging the fifth-highest electric rates in the country (LIPA had been No.2, behind Con Ed, until this year, according to a spokeswoman). It’s gotten raked over the coals in surveys of consumer satisfaction by J.D. Power and Associates. It’s been without a chief executive officer for nine months, hampering efforts to chart its future for the next several decades. Its chairman, Howard Steinberg, was in a serious motorcycle accident days before June’s important meeting of the board of trustees, all unpaid volunteers appointed by the governor, the Assembly Speaker and the Senate majority leader, as they’re about to go public next week on July 21 with a consultants’ report outlining LIPA’s strategic options.

Fortunately, the chairman’s recovering, and the lights are still on. Yet September will be here soon, and the utility is at the crossroads. In less than 100 days, LIPA says it will award a new long-term management contract, worth billions of dollars, to either National Grid, Con Edison or New Jersey’s PSE&G to manage electricity delivery for the Island. It will also have to determine whether it continues as a hybrid public utility that contracts out the actual energy operation, including billing and customer services, to a private entity as it does now, privatize itself, or become a municipally run public utility, which would bring all the locally based Nat Grid employees on Long Island, numbering more than 1,000, under one roof, working for one boss.

No doubt it must pain Steinberg, LIPA Chief Operating Officer Michael Hervey and others who want to solve Long Island’s energy problems that there’s a slew of hot-button topics generating the wrong kind of publicity as these critical decisions loom. Here’s a partial list of complaints: trying to impose a $1.25 fee for hanging Old Glory on utility poles in Shelter Island; charging commercial rates to residential customers who misunderstood their bills (some folks have been refunded thousands of dollars since the mistakes were reported); paying almost $100 million in unnecessary sales taxes because it failed to designate National Grid as its purchasing agent, and overcharging its users $231 million for erroneously calculating lost power.

Nothing seems to capture the outrage like the $5.5 million in questionable bills LIPA dutifully paid National Grid last summer for Earl, the hurricane that never came ashore, some of which were brought to light this spring: a $504 trip to Hooters, a $93-per-person dinner tab at Burton & Doyle steakhouse in Great Neck, and $160,000 spent on a leasing the Brilliant Transportation Company’s Mercedes Benz vans to transport out-of-state crews from their hotels to work-staging areas.

The ongoing fury about the overcharges and the overbillings has reached Albany. State Comptroller Thomas DiNapoli says “further oversight” is needed, particularly of National Grid’s conduct. In May, Gov. Andrew Cuomo ordered Ellen Biben, the state’s inspector general, to look into LIPA’s billing errors and rate-making decisions. Responding to the scrutiny, LIPA also hired its own director of internal audits.